Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Dominic Lawson: The billionaire capitalist who does not crave to leave his name behind in lights

Warren Buffett will probably be successful in his quixotic quest for anonymity

Friday 30 June 2006 00:00 BST
Comments

I was not surprised that Warren Buffett, the world's second richest man, decided to give away almost all of his $44bn to charity; I was surprised that he said he would put $31bn of it under the control of the only man richer than him, Bill Gates.

Two years ago I paid a visit to Warren Buffett, in his hometown of Omaha, Nebraska. It's not an easy place to get to from London - there are no direct flights. And when I got there, the taxi driver had not heard of Berkshire Hathaway, the holding company for Buffett's investment empire. That is not as odd as it seems: what Buffett self-mockingly describes as "global headquarters" is part of one floor of a small rented building in downtown Omaha, which he shares with 12 other employees.

Buffett had said he would give me only half an hour of his time, and although I had wondered whether that would be worth such a voyage, his astonishing rapid-fire delivery, in an accent eerily reminiscent of Jimmy Stewart, meant that I got full answers to my list of 20 questions before the time was up. And how absurd to be greedy for more, when this week an auctioned lunch with Warren Buffett has reached a price of $500,000 on eBay - the proceeds to go to charity, of course.

My first question had been: what are you going to do with all that money? For Buffett's unwillingness to spend his wealth has become legendary. He has lived for half a century in the house he bought for $31,000 as a not particularly wealthy newly-wed. He has never paid himself - or any of his other shareholders - a dividend. And he has never - up till now - sold a share in his company. (That's just one reason why just a single share in Berkshire Hathaway will set you back $92,000.)

Buffett said to me: "100 per cent of my stock will go to my wife. After the deaths of both of us, it will all go to a charitable foundation. That will be it." In fact Buffett's wife, Susan, had left him in 1977 to pursue a career as a night-club singer in San Francisco. But he remained completely devoted to her, and although Susan had thoughtfully set him up with a Latvian-born waitress called Astrid, they had never divorced.

A few months after my conversation with Buffett, Susan died suddenly from a stroke. I imagine that the bereaved Buffett then began to wonder whom else he could trust with the colossal responsibility of running a $30bn-plus charity. Bill Gates was already a friend - through playing bridge together on the internet - and the remorselessly logical Buffett must have reasoned that the only person who could cope with such a burden was a man who had already set up a $30bn charity of his own - the Bill and Melinda Gates Foundation.

When I saw him back in 2004, Buffett did not seem to have the faintest idea of what causes his wife would have spent the money on, and I'm not sure that he was interested, either. He told me: "The trustees' judgement above ground will be better than my judgement below ground. I just want them to do very big things that don't have a natural funding constituency. In business I'm looking for easy things to do - in philanthropy by definition the important problems are those which have already resisted both intellect and money. The trustees have a totally blank canvas."

This surely is the most valuable point, which will already have occurred to Bill Gates: there is little point in using a bequest of $60bn simply to act as a proxy for national exchequers, much as the governments of the world will be queuing up to persuade Mr and Mrs Gates to fund the programmes that they think will do most for their own domestic political popularity.

The late Sir Paul Getty, who gave spectacularly in this, his adopted country, called his own charity "a fund for unpopular causes". Still active today, its website declares a list of causes it will not fund, which include: "Young children, animals, education, health and churches." Just as Paul Getty believed that it was not for him to help the state fund health and education, nor did it make sense to attempt to duplicate the work of charities such as the NSPCC or the RSPCA, who can always add to their considerable reserves through fundraising campaigns.

That is part of the extraordinary strength inherent in the Gates foundation, especially when it is doubled up with Buffett's billions; it doesn't need to be popular, or appeal to the mass media, because it has no need of their support. Perhaps even more advantageously, it will not - at least I hope it will not - have the cumbersome politicised bureaucracy of most big charities. Bill and Melinda can just decide over their breakfast orange juice in Seattle how $3bn a year should be spent, and if they want to direct all of it at any one time to preserve the way of life and language of endangered Amazonian pygmy tribes, then they can and will.

The other refreshing aspect of the Buffett and Gates approach to charitable giving is that neither of them seem to be men whose motives are linked to their egos. That can create some unattractive monuments. As Buffett told me in his rented office: "I know people who are very rich and have their names on buildings. But nobody loves them, not even their family and not the people who live in their buildings."

Buffett's attitude to his own family's financial wellbeing is fascinating. When in 1987 his sister Doris lost $1.4m on inadvisable financial dealings, Warren refused to pay off her debt and she was obliged to default. He explained to me that "I would have been paying off her creditors. I wouldn't have been helping her." But Doris is thought to have been most upset.

And when I attended the Berkshire Hathaway AGM, he launched into his familiar tirade against inheritance: "There's no reason why future generations of little Buffetts should command society just because they came from the right womb." Hearing the applause of his devoted shareholders, he exclaimed: "My children are here! Are they applauding too?" At that moment, I felt rather sorry for them.

Warren Buffett will probably be successful in his quixotic quest for anonymity, and not just because he is leaving his billions to a charity in someone else's name. Unlike the other great American businessmen-philanthropists he achieved his colossal wealth without changing society in any observable way.

John Rockefeller invented the modern oil industry, Henry Ford the mass-produced automobile industry and Bill Gates the mass use of digital language. Warren Buffett simply understood better than anyone else when to buy shares in other people's businesses. So perhaps, despite his apparent contempt for the trappings of wealth, he is the greatest capitalist of them all.

d.lawson@independent.co.uk

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in